Tim Beissmann

The boss of Subaru's parent company says the brand is standing at a "major turning point" and has important decisions to make on whether to continue as a niche all-wheel-drive manufacturer or become more mainstream to chase higher sales.

Fuji Heavy Industries president Yasuyuki Yoshinaga told Bloomberg debate was fierce within the company about its direction for the future, with some keen to see the brand stick to what it knows and others pushing for an expansion of the line-up and growth into lucrative developing markets like India.

“Some people in the company may want to make mass-market products or cheaper cars, but is this really the right direction for Subaru?”

Yoshinaga admits to being cautious of growing too quickly with the wrong products and risk diluting the brand, and believes Subaru’s current strategy of offering vehicles at a slight premium to its rivals remains right for the business.

“We’re not a car maker that can grow as big as Toyota. And even if we could, reaching that sort of scale would mean we’d stop being Subaru,” he said.

“It shouldn’t just be about volumes. We should be making cars only Subaru can make that are a little more expensive and more profitable than the competition.”

Subaru’s global sales totalled 724,000 last financial year (ending March 31). Company forecasts estimate that could rise to 752,000 this financial year, while the Japanese car maker has longer-term ambitions of reaching 850,000 by 2016 and one million by the end of the decade.

Yoshinaga describes producing up to one million vehicles per year as an “appropriate level” for Subaru.

Australian sales of Subaru vehicles have fallen 2.3 per cent so far this year to 23,815, with the Forester (7937 units, up 12.6 per cent) and the XV (6241 units, up 6.8 per cent) leading the charge, but the Impreza (4242 units, down 11.8 per cent), Outback (2423 units, down 16.5 per cent) and Liberty (1697 units, down 40.9 per cent) all losing ground.